Boosted by a record $2 million 'Super Mario Bros.' sale, the retro video game collector's market is being overrun by speculators looking to cash in

• In 2021, two classic "Super Mario" games sold for $1.5 and $2 million dollars apiece.
• The games each set sales records - and new precedents - in the retro video game collector's market.
• That market is now being overrun by speculators looking to make money.

On July 12, a copy of the Nintendo 64 classic "Super Mario 64" sold at auction for a whopping $1.56 million, instantly making it the most expensive video game on the planet.

Less than a month later, it was bested by a previous entry in the same series: a sealed copy of "Super Mario Bros." for the original Nintendo Entertainment System that sold for $2 million.

Those prices didn't only set precedents - they also represented a massive inflation in the price of retro games. "Super Mario Bros.," for instance, had set a previous sales record in March 2019 of just over $100,000.

What, in the 18 months between those two sales, had caused the value to spike 20 times its previous sales price?

Enter: Market speculators.

The $2 million copy of "Super Mario Bros." wasn't sold through a traditional auction house, but instead through one of several new services that turns buying and selling rare collectibles - like video games, sports cards, and comic books - into a form of stock trading.

Users are able to buy a fraction, or "shares" of something like a copy of "Super Mario Bros." When that copy sells, as decided by the "shareholders," those shareholding users get paid out.

The three biggest players in this emerging speculative market are Rally, Mythic Markets, and Otis. Rally is where the $2 million "Super Mario Bros." was sold.

Investors, not collectors

Rally originally purchased the $2 million "Super Mario Bros." for $140,000 in a private sale last summer. The game was then offered as shares with a market cap of $150,000. When it sold for $2 million, investors made a handsome return.

One man who invested $100 told The New York Times he was walking away with $950 on top of the original $100 he spent.

"It's pretty crazy to think that I made an investment in it because of the nostalgia of playing the video game when I was a kid and now it's selling for $2 million," he said.

It's especially crazy given that the game had cost Rally $140,000 just 12 months prior. The game was still the same, with the same quality grade and the same level of rarity - the only thing that had changed was the market.

Retro game prices began creeping up, and then doubling or more, in the last few years. That is at least partially due to so-called "fractional share" services like Rally.

Questions around what's driving up prices

The sharp increases in pricing has led to some speculation on social media that auction houses could be in some way fueling the fervor for retro games.

YouTuber Karl Jobst, who closely follows the video game subculture of speedrunning, recently accused the auction house Heritage Auctions and video-game grading firm Wata Games of working together to push up the prices of retro games. In August, he posted an hour-long video that has been viewed more than one million times and details his speculations.

Wata Games and Heritage Auctions stand to gain from the rising price of retro games, since each takes a percentage-based cut of a game's value. Thus, the higher the overall value of a game, the more each company can earn from the rating process and subsequent sale.

In the video, Jobst claimed that Heritage Auctions cofounder Jim Halperin helped push up the cost of video games in 2019 by buying Wata-graded "Super Mario Bros" for $100,000. At the time, Halperin's purchase was touted by Wata Games president Deniz Kahn as the most expensive video game ever sold.

Jobst also referred to Halperin's history in the collectibles business, particularly in antique coins. He pointed to a $1.2 million fine that Heritage Auctions paid to settle FTC allegations that Halperin gave inflated grades to coins and marketed them through a Heritage-backed outfit called Certified Rare Coin Galleries, as Forbes reported in 2004.

Both Heritage Auctions and Wata Games denied all claims of collusion and market manipulation.

"The claims in this video are completely baseless and defamatory," a public relations firm representing Wata Games said in a statement to Insider. The statement also said that Jobst "did not contact us to give us the opportunity to correct him," which Jobst refuted on Twitter.

"Heritage has always acted with the utmost integrity and has never falsely inflated the collector video-game marketplace or any other," a statement from Heritage sent to Insider said. Regarding the FTC fine, the company statement said, "Heritage Auctions settled for $1.2 million to avoid protracted litigation and admitted no wrongdoing."

Got a tip? Contact Insider senior correspondent Ben Gilbert via email (bgilbert@insider.com), or Twitter DM (@realbengilbert). We can keep sources anonymous. Use a non-work device to reach out. PR pitches by email only, please.